Treasury Secretary W. Michael Blumenthal said yesterday that he believes much of the necessary depression of the dollar in the world's foreign exchange markets "has already occurred."

But Blumenthal indicated in wideranging interview on international financial affairs that he is prepared for the dollar to depreciate further, without making an effort to intervene.

"I would like to see a free floating - apart from smoothing out ragged movements - and allow the exchange rate between the dollar and the yen and the dollar and the Deutschemark to settle down where it does in that context.

"Whether or not that point has been reached, time will tell, and I would be quite happy to live with whatever the result is," the Secretary said. He noted that in conversations here a few days ago. West German Chanceller Helmut Schmidt had agreed that the mark will also be allowed to float. Similar indications hae come from the Japanese, but officials carefully monitor the course of the yen to see what actually happens.

The U.S. government has been pressuring the West German and Japanese authorities for months to allow an increase in the value of their currencies as a way of reducing their trade surpluses. A higher price for the mark and yen makes. German and Japanese goods more expensive, and the cost of importing goods from other countries less expensive.

The mirror image of a strongey mark and yen is a weaker dollar, which concentional wisdom in some quarters labels an unhappy conditions for the United States. One specific concern is that a cheaper dollar makes it more costly for the United States to import goods, thus adding to inflationary pressures.

A recent critical analysis by F. Eberstadt & Co. Inc. of New York said that Blementhal's acceptance of depreciation of the dollar "seems to ignore the role of dollar-denominated assets as an international store of value." To the extend that selling dollars and dollar assets gains momentum, the brokerage house said, it threatens higher interest rates.

But many economists believe that it would be highly desirable for the U.S. dollar to depreciate further, in order to reduce the U.S trade deficit which is running at a staggering rate of $9.0 billion just two years ago.

International economics expert Edward M. Berstein, calls the dollar overvalued. He would like to see the depreciation against the mark, which has been 3 per cent so far this year, increase to 10 per cent.

That is exactly the amount by which the dollar has depreciated against the yen so far this year.

For the Germans, further up-valuation of the mark would be painful. Schmidt is under great pressure from German manufacturers not to let the mark get so high that their products become less competitive in world market. A special concern is that further appreciatioon of the mark wuold make Volkswagens less attrative in the American market than Japanese Toyotas and Datsuns.

Historically, however, appreciation of the mark has not served to trim the German export surplus, which indicates that price is not th only factor in shaping export demand.

Blumenthal doesn't agree that the dollar is seriously overvalued, a condition that would be defined by an excessive volume of imports.

"The movement against the mark and the yen indicate that an adjustment is taking place," he said. "You should be careful "in assuming a dollar overvaluation) because when you look at our merchandise trade, you find that we have, except for oil, 3 very large surplus.

"It is difficult to see any evidence that the competitive position in manufactured goods has in any way worsened for the United States."